I am still buying so let's wait for Thursday next week, shall we?
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My lips are sealed...I know Nothing ! https://www.youtube.com/watch?v=izAqFoLtzKM
OK someone has to spill the beans. On the 15th October Jacinda Ardern will announce that all of those entering quarantine in NZ will have to have all their clothes burned to avoid potential contamination and ongoing spread of Covid-19. Now we are entering spring, all quarantining can be done in the nude. This will also improve security by making it more obvious if a detainee escapes. At the end of two weeks detainees will get to rebuild their wardrobe, all paid for by the government, by ordering from NZ's best website equipped clothing retailer. And the company that has won that contract is - drum roil - HLG!
SNOOPY
LOL how did you guess ;)
I've been sworn to secrecy...all I can say is I bought even more at $6 today.
If someone knows something that is board level only? or has someone got an ear to an insider? If MR B is buying we should be all ears? We night be temped to buy some in a portfolio just as a gamble for that would be what it is. A Rumour buy? now that is something professional investors dont usually do.
"I've been sworn to secrecy"
now this really is interesting? im tempted to move some money into a holding company and buy monday.
The actions of the 3 B's, the Brave Brilliant Mr B (a take on the movie Turner , the painter) tell us he really very "BULLISH" on HLG.
Just a word of caution.
HLG received rent relief from landlords,what ,or how much we do not know.Some of the Malls HLG are in will not recover their pre Covid 19 foot traffic.
With HLG trading so well, AND paying a divie, I can not see landlords being too generous with on going rent accommodations.
That said, with so many fashion retailers [and many other retailers] in Aussie facing closure, Aussie landlords will look favourably to having Glassons as a tenant.Aussie is where I see HLG growth coming via Glassons.
Generally tougher times see lower margins,and with HLG's major customers, women and youth, being the most affected by a tighter economy, HLG do face headwinds.Just how strong those winds will be I do not know.
Should we see people continuing working from home ,this too should be taken into consideration, as we know it also affects HLG sales.
I think I need to hose down this thing a bit to be fair to others. Balance has shared some information with me because we're mates. Its not inside information, its not board level and the outcome is not certain. He asked me to keep it quiet and i am respecting that request, its up to him when he wants to share. Clearly based on my action yesterday and earlier this week with buying at about $6 I think what might happen that he has shared has its merits but to be absolutely clear I am buying on the compelling fundamental's only and I think trading at $6 cum a fully imputed dividend of 24 cps the market is not yet pricing those fundamental's in for where interest rates are.
Investors should stick to the fundamental's and make their own assessment on HLG based on its merits.
I re-summarize my investment thesis below.
1. The company has demonstrated tremendous resiliency during Covid. This is deeply impressive and was a real surprise to me.
2. It is now clear they have demonstrated real brand power with the Glassons brand with extremely strong growth in online sales.
3. I think the advantage of selling 30% online will be both sticky and will confer a very meaningful advantage going forward. I doubt this is currently being valued by the market. (Online is the holy grail of retail and these guys are very smart with their digital platforms and marketing).
4. Much more favorable exchange rates and lower logistical costs this year,.
5. FY21 year to date sales up 11% compared to last year before anyone had even heard of Covid, frankly I find that remarkable
6. I expect in FY21 HLG will comfortably exceed last years profit, I see 50 cps as a fairly safe forecast with the risk to the upside.
7. That's a forward PE of just 12, (which is a no growth PE so the market is not pricing HLG correctly in my view).
8. With interest rates at 100 year lows, I think a forward PE of 12 is too cheap and this deserves at least the same PE as Briscoes (14.3) which suggests at least $7.15 is fair value
9. Their very strong cash position, ~ $50m as at balance date which is deeply impressive for a company of this size, and with no debt means HLG are well capable of paying all earnings or the vast majority of them out as dividends going forward. This is also supported by an apparent lack of need for any meaningful capex in the current environment with their focus on online sales and having recently completed new distribution center's in both N.Z. and Australia
10. 50 cents fully imputed per annum or very close to that appears sustainable for the foreseeable future given the growth of Glassons.
(whether they do pay the full 50 cents out or not, we can take considerable comfort from Tim Glasson's 20% stake that he has the owners eye, (as Percy calls it) on HLG and whatever they decide it will be in the best interests of shareholders.
11. If they pay all the eps out the shares are on a net basis, (look through the next dividend), HLG are on a 12% gross yield. I think this phenomenal.
12. No debt, excellent stock turn, strongly growing brand with Glassons and potential to turn around Hallensteins to where it used to be.
Better to invest on fundamental's than rumors and that's what I am doing when I'm buying at $6 because at a net price of $5.76, (adding back the dividend receivable shortly), I believe there is deep value remaining with HLG.
Remiss if I didn't mention risks. Yes, absolutely there is a risk of another Covid breakout but they have demonstrated tremendous resiliency with coping with this to date and one must also consider the opposite, that a vaccine might be available next year and then its onward and upward. One also needs to keep in mind there's risks with all stocks.
When I compare the above fundamental's with other opportunities on the NZX I think there's a compelling case for a decent portfolio allocation to HLG primarily as a yield stock but there's growth there too so to my mind this is a classic GARP stock, (Growth at a reasonable price).
GARP stocks are a rare thing in this market.